GREGORIO R.

VIGILAR,
SECRETARY OF THE
DEPARTMENT OF PUBLIC
WORKS AND HIGHWAYS
(DPWH), DPWH
UNDERSECRETARIES
TEODORO E. ENCARNACION
AND EDMUNDO E.
ENCARNACION AND EDMUNDO
V. MIR, DPWH ASSISTANT
SECRETARY JOEL L. ALTEA,
DPWH REGIONAL DIRECTOR
VICENTE B. LOPEZ, DPWH
DISTRICT ENGINEER
ANGELITO M. TWAO, FELIX A.
DESIERTO OF THE TECHNICAL
WORKING GROUP VALIDATION
AND AUDITING TEAM, AND
LEONARDO ALVARO, ROMEO
N. SUPAN, VICTORINO C.
SANTOS OF THE DPWH
PAMPANGA 2
ND
ENGINEERING
DISTRICT,
Petitioners,



- versus -



ARNULFO D. AQUINO,
Respondent.

G.R. No. 180388





Present:

CORONA, C.J.,
CARPIO,
CARPIO MORALES,
VELASCO, JR.,
NACHURA,
LEONARDO-DE CASTRO,
BRION,
PERALTA,
BERSAMIN,
DEL CASTILLO,
ABAD,
VILLARAMA, JR.,
PEREZ,
MENDOZA, and
SERENO, JJ.





Promulgated:


January 18, 2011
x - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x


D E C I S I O N

SERENO, J .:

Before the Court is a Petition for Review on Certiorari1[1] under Rule 45 of
the Rules of Court, assailing the Decision2[2] of the Court of Appeals in C.A.-G.R.
CV No. 82268, dated 25 September 2006.
The antecedent facts are as follows:
On 19 June 1992, petitioner Angelito M. Twao, then Officer-in-Charge
(OIC)-District Engineer of the Department of Public Works and Highways
(DPWH) 2
nd
Engineering District of Pampanga sent an Invitation to Bid to
respondent Arnulfo D. Aquino, the owner of A.D. Aquino Construction and
Supplies. The bidding was for the construction of a dike by bulldozing a part of the
Porac River at Barangay Ascomo-Pulungmasle, Guagua, Pampanga.
Subsequently, on 7 July 1992, the project was awarded to respondent, and a
Contract of Agreement was thereafter executed between him and concerned
petitioners for the amount of PhP1,873,790.69, to cover the project cost.
By 9 July 1992, the project was duly completed by respondent, who was
then issued a Certificate of Project Completion dated 16 July 1992. The certificate



was signed by Romeo M. Yumul, the Project Engineer; as well as petitioner
Romeo N. Supan, Chief of the Construction Section, and by petitioner Twao.
Respondent Aquino, however, claimed that PhP1,262,696.20 was still due
him, but petitioners refused to pay the amount. He thus filed a Complaint3[3] for
the collection of sum of money with damages before the Regional Trial Court of
Guagua, Pampanga. The complaint was docketed as Civil Case No. 3137.
Petitioners, for their part, set up the defense4[4] that the Complaint was a
suit against the state; that respondent failed to exhaust administrative remedies; and
that the Contract of Agreement covering the project was void for violating
Presidential Decree No. 1445, absent the proper appropriation and the Certificate
of Availability of Funds.5[5]
On 28 November 2003, the lower court ruled in favor of respondent, to wit:
WHEREFORE, premises considered, defendant Department of Public
Works and Highways is hereby ordered to pay the plaintiff Arnulfo D. Aquino the
following:
1. PhP1,873,790.69, Philippine Currency, representing actual
amount for the completion of the project done by the plaintiff;
2. PhP50,000.00 as attorneys fee and
3. Cost of this suit.
SO ORDERED. 6[6]






It is to be noted that respondent was only asking for PhP1,262,696.20; the
award in paragraph 1 above, however, conforms to the entire contract amount.
On appeal, the Court of Appeals reversed and set aside the Decision of the
lower court and disposed as follows:
WHEREFORE, premises considered, the appeal is GRANTED. The
CONTRACT AGREEMENT entered into between the plaintiff-appellees
construction company, which he represented, and the government, through the
Department of Public Works and Highway (DPWH) Pampanga 2
nd
Engineering
District, is declared null and void ab initio.
The assailed decision of the court a quo is hereby REVERSED AND SET
ASIDE.
In line with the pronouncement in Department of Health vs. C.V.
Canchela & Associates, Architects,7[7] the Commission on Audit (COA) is
hereby ordered to determine and ascertain with dispatch, on a quantum meruit
basis, the total obligation due to the plaintiff-appellee for his undertaking in
implementing the subject contract of public works, and to allow payment thereof,
subject to COA Rules and Regulations, upon the completion of the said
determination.
No pronouncement as to costs.
SO ORDERED.8[8]

Dissatisfied with the Decision of the Court of Appeals, petitioners are now
before this Court, seeking a reversal of the appellate courts Decision and a
dismissal of the Complaint in Civil Case No. G-3137. The Petition raises the
following issues:



1. WHETHER OR NOT THE COURT OF APPEALS ERRED IN HOLDING
THAT THE DOCTRINE OF NON-SUABILITY OF THE STATE HAS NO
APPLICATION IN THIS CASE.

2. WHETHER OR NOT THE COURT OF APPEALS ERRED IN NOT
DISMISSING THE COMPLAINT FOR FAILURE OF RESPONDENT TO
EXHAUST ALL ADMINISTRATIVE REMEDIES.

3. WHETHER OR NOT THE COURT OF APPEALS ERRED IN ORDERING
THE COA TO ALLOW PAYMENT TO RESPONDENT ON A QUANTUM
MERUIT BASIS DESPITE THE LATTERS FAILURE TO COMPLY WITH
THE REQUIREMENTS OF PRESIDENTIAL DECREE NO. 1445.

After a judicious review of the case, the Court finds the Petition to be
without merit.
Firstly, petitioners claim that the Complaint filed by respondent before the
Regional Trial Court was done without exhausting administrative remedies.
Petitioners aver that respondent should have first filed a claim before the
Commission on Audit (COA) before going to the courts. However, it has been
established that the doctrine of exhaustion of administrative remedies and the
doctrine of primary jurisdiction are not ironclad rules. In Republic of the
Philippines v. Lacap,9[9] this Court enumerated the numerous exceptions to these
rules, namely: (a) where there is estoppel on the part of the party invoking the
doctrine; (b) where the challenged administrative act is patently illegal, amounting
to lack of jurisdiction; (c) where there is unreasonable delay or official inaction
that will irretrievably prejudice the complainant; (d) where the amount involved is
relatively so small as to make the rule impractical and oppressive; (e) where the
question involved is purely legal and will ultimately have to be decided by the
courts of justice; (f) where judicial intervention is urgent; (g) where the application
of the doctrine may cause great and irreparable damage; (h) where the controverted


acts violate due process; (i) where the issue of non-exhaustion of administrative
remedies has been rendered moot; (j) where there is no other plain, speedy and
adequate remedy; (k) where strong public interest is involved; and (l) in quo
warranto proceedings. In the present case, conditions (c) and (e) are present.
The government project contracted out to respondent was completed almost
two decades ago. To delay the proceedings by remanding the case to the relevant
government office or agency will definitely prejudice respondent. More
importantly, the issues in the present case involve the validity and the
enforceability of the Contract of Agreement entered into by the parties. These
are questions purely of law and clearly beyond the expertise of the Commission on
Audit or the DPWH. In Lacap, this Court said:
... It does not involve an examination of the probative value of the
evidence presented by the parties. There is a question of law when the doubt or
difference arises as to what the law is on a certain state of facts, and not as to the
truth or the falsehood of alleged facts. Said question at best could be resolved
only tentatively by the administrative authorities. The final decision on the
matter rests not with them but with the courts of justice. Exhaustion of
administrative remedies does not apply, because nothing of an administrative
nature is to be or can be done. The issue does not require technical
knowledge and experience but one that would involve the interpretation and
application of law. (Emphasis supplied.)

Secondly, in ordering the payment of the obligation due respondent on a
quantum meruit basis, the Court of Appeals correctly relied on Royal Trust
Corporation v. COA,10[10] Eslao v. COA,11[11] Melchor v. COA,12[12] EPG




Construction Company v. Vigilar,13[13] and Department of Health v. C.V.
Canchela & Associates, Architects.14[14] All these cases involved government
projects undertaken in violation of the relevant laws, rules and regulations covering
public bidding, budget appropriations, and release of funds for the projects.
Consistently in these cases, this Court has held that the contracts were void for
failing to meet the requirements mandated by law; public interest and equity,
however, dictate that the contractor should be compensated for services rendered
and work done.
Specifically, C.V. Canchela & Associates is similar to the case at bar, in that
the contracts involved in both cases failed to comply with the relevant provisions
of Presidential Decree No. 1445 and the Revised Administrative Code of 1987.
Nevertheless, (t)he illegality of the subject Agreements proceeds, it bears
emphasis, from an express declaration or prohibition by law, not from any intrinsic
illegality. As such, the Agreements are not illegal per se, and the party claiming
thereunder may recover what had been paid or delivered.15[15]
The government project involved in this case, the construction of a dike, was
completed way back on 9 July 1992. For almost two decades, the public and the
government benefitted from the work done by respondent. Thus, the Court of
Appeals was correct in applying Eslao to the present case. In Eslao, this Court
stated:
...the Court finds that the contractor should be duly compensated for services
rendered, which were for the benefit of the general public. To deny the payment




to the contractor of the two buildings which are almost fully completed and
presently occupied by the university would be to allow the government to
unjustly enrich itself at the expense of another. Justice and equity demand
compensation on the basis of quantummeruit. (Emphasis supplied.)

Neither can petitioners escape the obligation to compensate respondent for
services rendered and work done by invoking the states immunity from suit. This
Court has long established in Ministerio v. CFI of Cebu,16[16] and recently
reiterated in Heirs of Pidacan v. ATO,17[17] that the doctrine of governmental
immunity from suit cannot serve as an instrument for perpetrating an injustice to a
citizen. As this Court enunciated in EPG Construction:18[18]
To our mind, it would be the apex of injustice and highly inequitable
to defeat respondents right to be duly compensated for actual work
performed and services rendered, where both the government and the public
have for years received and accepted benefits from the project and reaped
the fruits of respondents honest toil and labor.
... ... ...
Under these circumstances, respondent may not validly invoke the Royal
Prerogative of Dishonesty and conveniently hide under the State's cloak of
invincibility against suit, considering that this principle yields to certain settled
exceptions. True enough, the rule, in any case, is not absolute for it does not
say that the state may not be sued under any circumstance.
... ... ...
Although the Amigable and Ministerio cases generously tackled the issue
of the State's immunity from suit vis a vis the payment of just compensation for
expropriated property, this Court nonetheless finds the doctrine enunciated in the
aforementioned cases applicable to the instant controversy, considering that the
ends of justice would be subverted if we were to uphold, in this particular
instance, the State's immunity from suit.
To be sure, this Court as the staunch guardian of the citizens'
rights and welfare cannot sanction an injustice so patent on its face, and




allow itself to be an instrument in the perpetration thereof. Justice and
equity sternly demand that the State's cloak of invincibility against suit be
shred in this particular instance, and that petitioners-contractors be duly
compensated on the basis of quantum meruit for construction done on
the public works housing project. (Emphasis supplied.)

WHEREFORE, in view of the foregoing, the Petition is DENIED for lack
of merit. The assailed Decision of the Court of Appeals in CA-G.R. No. 82268
dated 25 September 2006 is AFFIRMED.
SO ORDERED.


MARIA LOURDES P. A. SERENO
Associate Justice

WE CONCUR:


RENATO C. CORONA
Chief Justice



ANTONIO T. CARPIO CONCHITA CARPIO MORALES
Associate Justice Associate Justice



PRESBITERO J. VELASCO, JR. ANTONIO EDUARDO B. NACHURA
Associate Justice Associate Justice



TERESITA J. LEONARDO-DE CASTRO ARTURO D. BRION
Associate Justice Associate Justice



DIOSDADO M. PERALTA LUCAS P. BERSAMIN
Associate Justice Associate Justice




MARIANO C. DEL CASTILLO ROBERTO A. ABAD
Associate Justice Associate Justice





MARTIN S. VILLARAMA, JR. JOSE PORTUGAL PEREZ
Associate Justice Associate Justice





JOSE CATRAL MENDOZA
Associate Justice

C E R T I F I C A T I O N

Pursuant to Section 13, Article VIII of the Constitution, I certify that the
conclusions in the above Decision had been reached in consultation before the case
was assigned to the writer of the opinion of the Court.


RENATO C. CORONA
Chief Justice